Aetna Co. v. Earle-Lansdell Co.

• Decision Date: 17 September 1925
• Citation: Aetna Co. v. Earle-Lansdell Co., 142 Va. 435 (1925)
• Parties: AETNA CASUALTY AND SURETY COMPANY v. EARLE-LANSDELL COMPANY.
• Court: Virginia Supreme Court

Page 435

142 Va. 435

AETNA CASUALTY AND SURETY COMPANY v. EARLE-LANSDELL COMPANY.

Supreme Court of Virginia, Staunton.

September 17, 1925.

1. HIGHWAYS — Bond of Contractor — Acts of 1922, Page 673 — Liability of Surety for Labor and Material — Case at Bar. — The instant case was an action against the surety on a road contractor's bond to recover for labor and material furnished the principal. The bond was given under Acts of 1922, page 673, requiring from the contractor a bond conditioned upon the faithful performance of the work in strict conformity with the plans and specifications for the same and contained the condition that the contractor should promptly pay claims for labor and material incurred in the construction contracted, the bond accorded substantially with the provisions of the contract.

Held: That the condition as to payment for labor and material was valid and that a judgment against the surety must be sustained.

2. STARE DECISIS — Interpretation of Judicial Opinions. — All expressions in judicial opinions should always be scanned and interpreted with reference to the specific issues then to be decided. It is not often possible so to forecast the varying conditions which arise in human transactions as to epitomize the law in rigid axioms.

3. BONDS — Statutory Bonds — Conditions Not Authorized by Law. — A statutory bond which contains conditions authorized by law as well as unauthorized conditions is void as to any condition imposed beyond what the law requires and good as to the conditions in conformity with statute. The unauthorized conditions are mere surplusage.

4. BONDS — Statutory Bonds — Bonds of Fiduciaries, Public Officers and in Judicial Proceedings — Conditions Must Conform with Law. — As to bonds of fiduciaries, public officers and those required in judicial proceedings, such as attachment, injunctions, etc., no official is vested with any discretion whatever (there being no voluntary contracts involved), but all the rights, duties and obligations of the principals are fixed by law, generally by statute, consequently the liability of the surety under such statutory bonds is limited by the words of the statute and conditions not warranted by the statute are void.

5. BONDS — Statutory Bonds — Contractors' Bonds for Public Works — Distinguished from Fiduciary Bonds. — Contractors' bonds for public works, though required by statute, must be construed in connection with specific contracts, and this differentiates them from fiduciary bonds.

6. BONDS — Statutory Bonds — Contractors' Bonds for Public Works — Construction — Following Statute. — Under many statutes authorizing contracts for road work, contractors are required to give bonds which must follow the statute, although mere informalities in the bond or in its execution will not necessarily avoid the bond. Such statutes should be liberally construed to effectuate their purpose.

7. BONDS — Statutory Bonds — Contractors' Bonds for Public Works — Where Statute Does Not Require Such Bond. — Even in the absence of a statute requiring contractors for public works to give a bond, where a board of county commissioners or other public authority is authorized by statute to contract for the performance of a work of public improvement, it may, by virtue of its incidental powers, require of the contractor the execution of a bond with surety conditioned for the proper performance of the work and other matters properly related thereto.

8. BONDS — Statutory Bonds — Contractors' Bonds for Public Works — Bond Broader than the Statute. — Where a statute requires that a contractor for public works shall give a bond conditioned as specified in the statute, the public authorities may, by virtue of their incidental powers, take a bond more broadly conditioned than is required by the statute, provided the statute does not prohibit the taking of such bond, and the matter of the additional provisions is properly related to the work of the improvement; and if such a bond is voluntarily given in consideration of the contract it may be enforced according to its terms.

9. BONDS — Statutory Bonds — Bonds of Contractors for Public Works — Bonds to Secure Payment of Subcontractors, Laborers and Material Men — Implied Powers. — Trustees or other persons upon whom the power has been conferred of entering into contracts for the construction of public works are regarded as having authority to take a bond from the contractor to secure the payment of subcontractors, laborers and material men.

10. BONDS — Statutory Bonds — Bonds of Fiduciaries — Bonds of Contractors for Public Works — Distinction as to Statutory Conditions. — There is nothing either illogical or inconsistent between the strict rule applicable to the bonds of fiduciaries and the same rule slightly modified as to bonds of contractors doing public work. While both are required by statute and are therefore statutory, this constitutes their chief similarity. In the case of fiduciaries, their duties are clearly defined by law and cannot be otherwise varied or enlarged, whereas, in the case of contractors, the controlling statute is of necessity general in its requirements, because the specific duties and obligations of contractors necessarily arise out of voluntary contracts which of necessity vary, and their obligations in each instance are defined by their specific contracts.

11. HIGHWAYS — State Highway Commission — Conditions of Contractor's Bond — Acts of 1922, Page 673. — Section 6 of the act of 1922, page 677, confers upon the chairman of the State Highway Commission plenary powers for constructing, improving and maintaining the roads embraced in the State highway system. Section 8 of the act of 1922, page 678, provides for a Contractor's bond "conditioned upon their faithful performance of the work." To construe this statutory provision as excluding a condition in the contractor's bond to pay claims for labor and material would defeat the purpose of the act. As the securing of materials is an essential part of the contract to do the work, failure or delay in securing them would prevent or retard performance, and, therefore, if so construed, the statutory condition would partly fail of its purpose, which certainly is to assure the performance of the contract in every essential particular.

12. HIGHWAYS — State Highway Commission — Conditions of Bond — Acts of 1922, Page 673 — Reference to Plans and Specifications. — There is no statute providing for uniform contracts, plans or specifications for the building of highways. All of these particulars rest in the control and are confided to the discretion of the State Highway Department, vested with plenary power, so that when the General Assembly provides for the making of contracts for particular work and for bonds for the faithful performance of that work in conformity with the plans and specifications therefor, it is perfectly apparent that the obligations of the contractor and his surety under such bonds are determined by the specific plans and specifications and the contracts so referred to.

13. HIGHWAYS — State Highway Commission — Acts of 1922, Page 673 — Does Not Limit Power to Prescribe Terms of Contractors' Bonds. — Acts of 1922, page 673, vests in the Highway Department the power and imposes upon it the duty of prescribing the form of contracts with all of their incidental provisions, and section 4 prescribing a bond was not intended either to limit these powers, or to prescribe in precise words the sole conditions of such bonds. In the instant case the language of the statute is broad enough to cover all the incidental provisions embodied in the contract and in the bond which was sued on.

14. JUDICIAL BONDS — Bond for Highway Construction — Action against Surety by Creditor for Labor Material. — Under section 5143, Code 1919, a creditor of a road contractor for labor and material may maintain an action on the contractors bond against his surety, such bond being made in part for his benefit.

UPON A PETITION FOR REHEARING.

November 18, 1925.

15. STREETS AND HIGHWAYS — Suit on Contractor's Bond for Labor and Material Furnished. — On petition for rehearing it was contended that as the statute (Acts 1922, chapter 403, section 8) makes the contractor's bond payable to the Commonwealth and fixes the minimum penalty, the penalty of the bond cannot be depleted by a claim based upon materials and labor supplied under the contract, because this would diminish the security of the Commonwealth. In the original opinion it was held that the State Highway Commissioner in requiring a bond obligating surety to pay for all labor and materials furnished, did not exceed the authority vested in him by the statute. This holding fully protects the rights of the surety for the limit of its liability is the gross penalty of the bond, and as the question was not raised in the instant case by the Commonwealth or any other potential claimant under the bond, it was not necessary to decide between various claimants as to priorities, or to apportion the available funds which were realized upon the bond between them.

Error to a judgment of the Circuit Court of the city of Richmond in a proceeding by motion for a judgment for money. Judgment for plaintiff. Defendant assigns error.

The opinion states the case.

George Bryan and W. Braxton Dew, for the plaintiff in error.

Hall, Hall & Peachy and Harold S. Bloomberg, for the defendant in error.

H. J. Kiser and C. R. McCorkle, amici curiae.

PRENTIS, P., delivered the opinion of the court.

H. A. Donald & Company, Inc., entered into a contract with the Commonwealth, by H. G. Shirley, Chairman of the State Highway Commission, to build about eleven miles of bituminous macadam roadway in Rockbridge and Augusta counties, in consideration of the specified unit prices and under certain conditions set forth in the specifications, special provisions, plans and proposal annexed to the contract. As required by law, the...